New Jersey Court Grants Lender Summary Judgment on Grounds of Estoppel, Ratification, Equitable Mortgage and Equitable Subrogation

In an opinion issued earlier this month in a case successfully argued by the firm’s Co-Managing Partner, Michael O’Donnell, the Superior Court of New Jersey, Chancery Division, Bergen County held that a property’s transfer to an LLC was not fraudulent, and that plaintiff Bank of America therefore could exercise the right of foreclosure because the mortgage was legal and, alternatively, the doctrines of ratification, equitable mortgage, and equitable subrogation would have applied.

Eighth Circuit Holds That Complaint Alleging That Law Firm Violated FDCPA by Attempting to Charge Compound Interest Should Not Be Dismissed

The United States Court of Appeals for the Eighth Circuit recently reversed a district court and held that a claim against a law firm should not be dismissed, finding that the firm may have violated the Fair Debt Collection Practices Act (the “FDCPA”) by seeking compound interest on a debt in violation of state law.  See Coyne v. Midland Funding LLC, 2018 WL 3423469 (8th Cir. July 16, 2018). 

New York Supreme Court Annuls Insurance Regulation 208

On July 5, 2018, Justice Rakower of the New York County Supreme Court issued a decision annulling the recently-enacted and controversial Insurance Regulation 208.  See New York State Land Title Association, Inc. v. New York State Department of Financial Services, 2018 WL 3306755 (N.Y. Sup. Ct. July 5, 2018).  The New York State Department of Financial Services (“DFS”) issued the regulation after purportedly finding that title insurance companies, title agents, and title insurance closers employed practices that resulted in higher premiums and closing costs for consumers.  

New Jersey Federal Court Dismisses RESPA and Consumer Fraud Act Claims Arising Out of Loan Modification But Allows FDCPA Claim to Proceed

The United States District Court for the District of New Jersey recently granted in part and denied in part a loan servicer’s motion for summary judgment seeking dismissal of a host of claims arising out of a purported loan modification, including claims under the Fair Debt Collection Practices Act (the “FDCPA”), the New Jersey Consumer Fraud Act (the “CFA”), and the Real Estate Settlement Procedures Act (“RESPA”).  See Dautrich v. Nationstar Mortg., LLC, 2018 WL 3201786 (D.N.J. June 29, 2018).  

New Jersey Court Holds Actual Knowledge Does Not Bar Equitable Subrogation

In a letter opinion issued on June 21, 2018, the Superior Court of New Jersey, General Equity Part in Hudson County, held that a lender’s actual knowledge of a prior mortgage does not operate as a bar to equitable subrogation.  See Citizens Bank, N.A. v. Davis, et al., HUD-F-18941-17 (June 21, 2018).  While unpublished, this opinion is significant in that it is a continuation of the departure by New Jersey courts from prior precedent holding that actual knowledge of a lien bars the application of equitable subrogation, as expressed in First Union Nat. Bank v. Nelkin, 354 N.J. Super. 557 (App. Div. 2002) (“the new lender is not entitled to subrogation, absent an agreement or formal assignment, if it possesses actual knowledge of the prior encumbrance”).

Texas Federal Court Dismisses Claim Against Title Insurance Company

The United States District Court for the Northern District of Texas recently denied in part and granted in part a title insurance company’s motion to dismiss an insured’s bad faith claims.  See Hall CA-NV, LLC v. Old Republic Nat’l Title Ins. Co., 2018 WL 298486 (N.D. Tex. June 14, 2018).  In the case, the plaintiff insured loaned money to a non-party to finance a construction project for a resort along the California-Nevada border, and the defendant title insurance company issued title insurance policies with regard to the same.  

Pennsylvania Federal Court Dismisses RESPA Claim Arising Out of Captive Reinsurance Arrangements

The United States District Court for the Western District of Pennsylvania recently dismissed a putative class action that alleged violations of the Real Estate Settlement Procedures Act (“RESPA”) for a captive reinsurance arrangement.  See Menichino v. Citibank, N.A., 2018 WL 502728 (W.D. Pa. 2018).  In the case, plaintiffs obtained residential mortgage loans from the defendant mortgagee, and plaintiffs were required to purchase primary mortgage insurance (“PMI”) because their down payments were less than 20% of the property value. 

New York Federal Court Dismisses FDCPA Class Action, Holds Limitations Period Under Federal Communications Act Did Not Preempt State Limitations Period

The United States District Court for the Eastern District of New York recently dismissed a putative class action brought under the Fair Debt Collection Practices Act (the “FDCPA”) and held that the two-year limitations period under 47 USC § 415 for “all actions at law by carriers for recovery of their lawful charges” did not preempt New York’s statute of limitations for a lawsuit on a debt arising from an unpaid cell phone contract.  See Torres v. Midland Credit Mgmt., Inc., 2018 WL 2304771 (E.D.N.Y. May 21, 2018).